European telecoms group Altice has agreed to buy U.S. regional cable company Suddenlink Communications in a $9.1 billion deal, marking its first move across the Atlantic where it is also interested in buying Time Warner Cable.
The surprise move is further evidence that Patrick Drahi, Altice’s billionaire founder, wants to build an empire in cable and mobile after doing four major deals last year alone.
But very few expected the 51-year-old tycoon to target the U.S., analysts said, since it seemed more likely that Altice would seek to consolidate its existing markets, namely France or Israel, to create larger cost savings more quickly.
Drahi sold the first business he built, a French cable company, to Malone’s European cable group UPC, working there for a while before creating Altice to further his own ambitions in 2001.
In addition to Suddenlink, the U.S.’s 7th largest cable player, Altice has also approached number two Time Warner Cable over a deal, after Comcast’s attempt to buy it foundered under regulatory opposition.
“Altice is very keen on Time Warner Cable,” a source familiar with the matter said.
With a market value of $44.5 billion, TWC would be a big bite for Altice, which has a market value of about $30 billion.
Altice will buy 70 percent of Suddenlink from existing shareholders BC Partners, CPP Investment Board and Suddenlink management, it said in a statement on Wednesday. BC Partners and CPP Investment Board will retain a 30 percent stake.
“Our investment in Suddenlink opens an attractive industrial and strategic avenue for Altice in the U.S., one of the largest and fastest growing communications markets in the world,” Altice Chief Executive Dexter Goei said.
Suddenlink is the seventh-largest U.S. cable operator with 1.5 million residential and 90,000 business customers spread largely over Texas, West Virginia, Louisiana, Arkansas and Arizona. Its sales grew 6 percent last year to $2.3 billion and operating profit grew at a similar pace to reach $905 million.
Drahi’s Altice is expected to apply its usual formula at Suddenlink, namely aggressive cost cuts and attention to profit instead of volume of customers. The strategy is starting to pay off at Altice-backed French cable company, Numericable, which bought the country’s second-largest mobile carrier, SFR, last year.